North America | Latin America | Europe | Middle East | Asia-Pacific North America | Latin America | Europe | Middle East | Asia-Pacific Association of Academic Health Centers Senior Administrative Officers/Fiscal Officers 2013 Annual Meeting | July 26, 2013 | Santa Fe, NM
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Grant Farrell, Managing Director of Chazey Partners US - Consolidating Back Office Functions Across A Univerysity System
For the conference organised by Association of Academic Health Centers Senior Administrative Officers/Fiscal Officers 2013 Annual Meeting | July 26, 2013 | Santa Fe, NM
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North America | Latin America | Europe | Middle East | Asia-Pacific North America | Latin America | Europe | Middle East | Asia-Pacific
Association of Academic Health Centers Senior Administrative Officers/Fiscal Officers
2013 Annual Meeting | July 26, 2013 | Santa Fe, NM
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Who We Are Definitions & Trends Lessons Learned
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Global Offices Flexible Resource Model
Presentation handout is appended with more information on Chazey Partners
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What is the back office?
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Remote from business
Unresponsive and inflexible
No Business/ Operational control over costs
Viewed as central overhead
Prevalence of shadow operations
Centralized
Challenges
Disparate processes
Multiple standards
Duplication of effort
Different control environments
High cost and costs unclear across the business
Not scalable
Decentralized
Challenges
Responsive to Business and Operational needs
Business/ Operations control decisions
Customized solutions to meet Business/ Operational requirements
Benefits Shared
Highly client focused
Commercially driven
Service Partnership Agreements
Clear unit costs
Flexible delivery
Clear understanding of drivers and activities
Common systems and support
Consistent standards and controls
Tight control environment
Economies of scale
Benefits
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Attribute Shared Services Centralization
Accountability Business Unit Corporate
Key Performance Target
Service excellence and continuous improvement
Cost reduction and central control
Service Partnership Agreements
Widespread Rare
Classification An independent unit Another corporate function
Responsibility Partnership Demarcation
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Shared Services is the organization that…
Providing services that are…
Achieve by leveraging…
Employs a specialist team
Geographically unconstrained
Client-focused
High quality Non-core Mission critical
Repetitive or professional Lower cost High efficiency
Organizational realignment
Technology
Standardization
Best Practices
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Higher Quality
Lower Costs
Improved Control
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Recession’s impact on funding
Increasing student fees not enough
Efficient/Effective back office is prerequisite
Several Shared Services examples in higher education sector
Next wave of Shared Services: broader scope, moving up value chain
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Strategic
• No longer a radical idea in the public sector
• Moving from an opportunity to a necessity
• Make It Mandatory and High Profile
• Can Work Across a Large Geography and Multiple Jurisdictions
• Opportunities are “Borderless”
• Core Challenges Unchanged
• Not Just Transactional
• End-to-End, Not Functional
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Structure
• Independence is Important
• Governance Matters
• Create Durable Structures
Business Cases
• Prepare Business Cases
• Recognize Need for Funding
• Infrastructure can be Enabler and Barrier
• Taxes Matter
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Implementation
• Get control of the budget
• Identify quick wins & strategic opportunities
• Co-Locate Staff
• Client-focused operating model
• Adapt rather than Adopt
• Changing Culture is challenging
• Multifunctional Enabled by New Technologies
• Outsourcing a Mess Doesn’t Clean It Up
• Delivery of Shared Services is Not a Core Government Skill
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Spring 2008: Mandate to transform the back office to provide 21 Common Services to general government, healthcare & education
Characteristics of Common Services before transformation:
Antiquated payroll system on brink of failure
Significant reduction in workforce through demographics in 5 years
Conservative 25% inefficiency rate in accounts payable and payroll
Decentralized
Multiple information technology data sites
Manual processes
Lack of self service options
Intersol and Chazey Partners hired to provide specialist expertise
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In 2008, undertook prioritization exercise to determine which of initial 21 services were best candidates for transformation
In 2011 undertook second round of strategic prioritization to assess the next round of opportunities to prioritize
2 new functions
4 new services that were extensions of existing functions
3 out-of-scope opportunities that could be supported by NBISA
Engaged broad cross-section of stakeholders
11 weighted criteria in four categories (financial, strategic, implementation, impact) were assessed & scored
Tools used included workshops, Activity Based Analysis, interviews, and benchmarking
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Developed initial scenarios for conceptual design
Based on moving towards leading practices
Considering suitability and do-ability for NBISA
Models considered: Shared Services agency, crown corporation, special agency, new department, distributed, clusters, status quo
Key tools and activities:
Leading practices diagnostics
End-to-end process design workshops
High level organizational design
Service delivery framework
High-level KPIs & metrics
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Savings of $8.8m annually ($32.1m over six years) net of investments
Other budgets $6.5m
IT Service Desk $2.0m (50%)
Accounts Payable and Payroll
$2.3m (30%)
New support structure $2.0m
Net Ongoing Savings $8.8m
Savings Investment Net
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KPIs continue to be monitored to drive continuous improvement
Volume of transactions processed
Performance against targets
Quality measures (eg. time to answer calls, abandonment rates)
Customer satisfaction rates
Sample observations
Backlogs in payables measured, explained, and addressed; resulting in 2x proportion paid within terms (average Nov-11 to Jan-12 vs Feb-12)
Working with departments/supplies to address delay between invoice date and receipt of invoice by NBISA
Client satisfaction trending upwards
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Consistent standards of service delivery
Economies of scale, including group purchasing
Sector-wide strategies, enhanced decision making
Organizational improvement and innovation
Opportunities for staff development and career advancement
Improved staff retention and recruitment
Better access to a pool of scarce or specialist skills & resources
* Adapted from Government of New Brunswick document, Government
Renewal – NBISA Workplan, Spring 2011
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New Brunswick is one of Canada’s three Maritime Provinces with a population of 750,000, supported by a provincial government annual budget of $8 billion. The Government of New Brunswick engaged Chazey Partners to develop the business case and implement shared services for several of their administrative functions. The result was the creation of the New Brunswick Internal Services Agency (NBISA), which initially included four service lines: Accounts Payable, Payroll and Benefits, IT Services Desk, and IT Operations. The project started in 2009, lasting three years.
Testimonial from Andrea Seymour, Vice President and COO, GNB “Phil Searle and the Chazey team has been helping is with our Shared Services program for the last two years and their support continues today. Chazey Partners initially validated the approach that we were taking in the summer of 2009, as we embarked on this exciting change and value-adding program for Government. They have since been actively and directly involved in planning, design, testing and implementation.
The initial 4 services deployed were Accounts Payable, Payroll and Benefits, IT Services Desk and IT Operations. The Chazey team (including Phil, John Martin, Grant Farrell and others) has brought process and domain expertise, as well as some level of passion for our success. The expert advice and support from Phil has been a major contributor to our success and the team from Chazey has really become part of our team and has performed a number of critical support and deployment roles, including comprehensive knowledge transfer. Phil has also been involved with advising us with our Enterprise Resource Planning initiative and his advice and counsel has been very important to us.
I would personally highly recommend Chazey Partners from my own experience with their team. Indeed, we still actively use their support today in a number of areas, and as we look to expand the scope of our New Brunswick Internal Services Agency.”
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We provide advice, guidance, support and implementation expertise, covering strategy setting, business case production, program management, outsourcing assessment, process optimization, technology enablement, training and change management.
Our functional breadth of experience includes the “big four” of HR, Finance, IT and Procurement, plus other support services such as Facilities, Real Estate, Legal, Communications, etc.
Example clients include Coca Cola Hellenic, Coca Cola Enterprises, Government of New Brunswick, Agrium, May Gurney, Gilead Sciences, Interior Health, Northern Health, Lawrence Berkeley Laboratory, FormFactor, National University of Ireland, Bridgestone, Gerdau, and many others.
Because we are passionate business people and Shared Service practitioners, we care about your success and deliver solutions relevant to your organization.
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We have serviced a great variety of clients across many industries and countries, covering Shared Services and Outsourcing, Business Transformation and Technology Enablement.
Due to the unique nature of working within the Public Sector and with Non-Profits, we wanted to specifically highlight the following organizations and experience below:
New Brunswick Internal Services Agency, New Brunswick, Canada Lawrence Berkeley National Laboratory, Berkeley, California Interior Health and Northern Health, British Columbia, Canada Stanford University University College Galway in Ireland, Ireland The World Wildlife Fund The International Baccalaureate National Health Services (NHS), UK Health Service Executive (Ireland) Non-Departmental Public Bodies (NDPBs) Ministry of Defense (MOD) South Yuba River Citizens League Outsourced Services to Local Authorities 28
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Phil Searle, Grant Farrell, Chas Moore and Janey Jux have chaired, arranged, presented at and facilitated workshops at a number of Public Sector Shared Services events, including the following:
• Shared Services in the Public Sector at the Queen Elizabeth II Conference Centre in London
• Chaired, presented at and help organize the Shared Services and Outsourcing Network‘s first North American Public Sector shared Services Conference, held in Chicago in November 2011
• Presented at and helped organize the Shared Services and Outsourcing Network’s second North American Public Sector Shared Services Conference, held in Chicago in November 2012
• Delivered a master class at the “Managing Change – Transforming the Public Sector” conference at the Barbican Centre, London 2011
• Chaired and presented at the 2012 “Power of Collaboration” conference for financial professionals in BC Healthcare at Vancouver, Canada
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Public Sector Shared Services and “Collaboration vs. Sharing”. Phil Searle, CEO Chazey Partners
What might be the Impact of the 2012 Presidential Election on Shared Services and Outsourcing in the US Public Sector? Phil Searle, CEO Chazey Partners
Are you getting the SPA treatment? Chas Moore, Managing Director, Canada
From front to back office. Grant Farrell, Managing Director, United States
Proactively managing your stakeholders. Janey Jux, Head of EMEA Public Sector Practice
Make or Buy Decision. Phil Searle, CEO Chazey Partners
What are Shared Services Best Practices? Phil Searle, CEO Chazey Partners
When is Shared Services not really Shared Services? Janey Jux, Head EMEA Public Sector Practice
Business Continuity Planning. Grant Farrell, Managing Director, United States
Client Relationship Management Framework. Grant Farrell, Managing Director, United States
Deploying Shared Services. Grant Farrell, Managing Director, United States
Developing the Business Case. Chas Moore, Managing Director, Canada
Shared Services Optimization. Phil Searle, CEO Chazey Partners
Technology Enablement. Grant Farrell, Managing Director, United States 30
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Business Transformation
We help clients to transform their support functions to realise significant benefits (lower costs, optimised working capital and improved performance) through best practice process development and roll out of optimal organisation, support and delivery structures.
Functional scope covering Finance, HR, IT and Procurement
Identify and target opportunities, and produce powerful business cases to reflect the opportunity and gain organisational buy in
Implement and support approved transformation initiatives rapidly to drive maximum ROI
Effective acquisition integration and business divestitures
Powerful project and change management, focussing on delivery and outcomes
Chazey Partners’ Profile • What We Do
Shared Services
Planning for, resourcing and implementing global and regional Shared Service Organisations (SSOs) covering a wide ranges of functions and processes including offshore solutions
Turning round sub optimal or failing SSOs
Statutory and Fiscal compliance delivered by SSOs for multiple countries and legal jurisdictions
Independent of any outsourcing providers, we offer impartial sourcing advice and support covering both internal and external options, to ensure that the best solutions for your business are found
Training and development for Shared Service practitioners and Shared Service customers
Technology Enablement
Implement and optimise ERP and other technology enablement solutions to maximise return on investment and in quick time.
Focussing on needs and value to the business, we view technology as an enabler and not an end in itself.
Resource technology projects to enhance chance of success through an optimal mix of IT, Business Systems Analysts, Business Process Integration, Business Process Owners, and Users
State of the art additional technology enablement where required
Effective training and support
Experience includes SAP, Oracle, JD Edwards, BAAN, Siebel, Peoplesoft, COINS and many others
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AS-IS
Carry out multiple site visits and
workshops
Review and catalogue any
existing process & sub
processes
Review a catalogue technology
landscape
Complete Activity based
Analysis
Finalise stakeholders interviews
Review existing reporting tools
and mechanisms 2 to 4 weeks
Current State Analysis:
Summary of Key Findings & Gap
Analysis
Proposed
Complete best Practice
diagnostics
High level process design
High level org design
Service delivery
framework
Define high level KPIs and
Metrics
Develop high level
operating model
Finalise Technology
assessment 4 to 5 weeks
Operating Model : To Be Processes & Organisational
Design
DESIGN, BUSINESS
CASE,
RECOMMENDATION
5 to 6 weeks
Opportunity Matrix
Business Case Evaluation
Location
Recommendations(s)
Recommend Governance
Framework
Implementation Plan
Change management Plan
Identification of next steps
Recommendation, Business Case & Implementation
Plan
Checkpoints with key stakeholders:
Project Board Steering Group
Ke
y
De
live
rab
les
BASELINE &
BENCHMARK
Project kick off &
mobilisation
Establish detailed plan,
timelines, key deliverables
etc. for this stage
Review output from work to
date
Initial Communications
Review and update baseline
Calculations
Complete Further
Stakeholder interviews
Ke
y A
cti
vit
ies
Wo
rk s
tep
0 to 2 weeks
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As-Is (4.0)
Considered finance function, not part of procurement
Manual invoices
All payments in through single SAP ERP
Accounts payable responsibility centralized
Weekly cheque runs plus ad hoc
No statistical review of small invoices
Manual cheques infrequent
Achieve 50% of available vendor discounts
EFT not used
To-Be (8.0)
Achieve leading practices except:
Continue with manual invoices (initially no funding for document management/scanning solution)
EFT only possible for 30% of vendors
Is part of an end-to-end purchase-to-pay process with front end transactional processes designed to minimize own stream error correction
Scan and route 100% of invoices when received by accounts payable processing center
Process all payments through a single system.
Centralized accounts payable responsibilities across the organization
Optimize number of check runs each month.
Review 100% of large dollar invoices and statistically sample the remainder
Eliminate manual cheque request generation.
Maximize vendor discounts
Utilize EFT for payment to eliminate use of paper cheques
0 4 10 2 6 8
Diagnostic Rating Scale:
• 1 = Leading Practice is not adopted
• 10 = Leading Practice is adopted in full
Score in Range 1-4
Score in Range 5-7
Score in Range 8-10
Current Future
Leading Practice Observations
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Balanced Scorecard
Creation of Service Partnership Agreements
Delineation of roles and responsibilities
between SSO and other functions / local regions / businesses
Standardised processes and sub-processes across all functions
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